XWEL 10-K & 10-Q changes, risk factors and insider trading

Our consolidated financial statements have been prepared on a going-concern basis. Historically, we have incurred operating losses and used cash in operating activities. As of December 31, 2025, we had cash and cash equivalents of approximately $2,716. Subsequent to year end, on February 24, 2026, we announced that we entered into a private placement of Series H Convertible Preferred Stock with accompanying warrants for expected gross proceeds of approximately $31,300 before fees and expenses. $9,000 of the proceeds was used to repurchase certain notes and redeem certain preferred stock and warrants, with the remainder available for working capital and general corporate purposes.

In light of the Series H financing and our current operating plan, management has concluded that the conditions that previously raised substantial doubt about our ability to continue as a going concern have been alleviated as of the date these financial statements are issued. Nevertheless, we expect to continue investing in our business and may seek additional financing to fund operations and strategic initiatives. There can be no assurance that additional financing, if needed, will be available on acceptable terms or at all. If we are unable to obtain sufficient capital when required, we may be forced to delay, reduce, or eliminate certain activities, implement additional cost-saving measures, or pursue strategic alternatives, any of which could adversely affect our business, financial condition, and results of operations.

The consolidated financial statements do not include any adjustments that might be necessary if we were unable to continue as a going concern.

We have historically relied, and expect to continue to rely, on a combination of existing cash resources and external financing to fund our operations, growth initiatives, and capital expenditures. While we have accessed the equity markets in the past, we may need to raise additional capital in the future to support the continued development and expansion of our travel health and wellness concept and other strategic initiatives. We may not be able to obtain such financing on acceptable terms, or at all. The availability and terms of additional financing may be affected by a number of factors, including our operating results, capital requirements, market conditions, and the trading price of our common stock. Any future equity financing could be dilutive to existing stockholders, and we may also be constrained in our ability to raise capital due to our stock price or market volatility. If we are unable to raise additional funds when needed, we could be required to delay, reduce, or eliminate certain operating or growth plans, which could adversely affect our business and results of operations.

Our operations in United Arab Emirates can be negatively impacted by recent military conflict in the Middle East.

On February 28, 2026, Israel and the United States initiated a coordinated military operation in Iran. In response, Iran launched missiles and unmanned aerial vehicles toward Israel and other countries in the region, including United Arab Emirates. We currently operate two XpresSpa locations in the Dubai International Airport in the United Arab Emirates, and one XpresSpa location in the Zayad International Airport in Abu Dhabi, United Arab Emirates. Both airports have sustained minor damages from drone and missile strikes, resulting in a fatality and injuries. As a result of the conflict, many airlines have also cancelled their flights to the region and certain airports, including airports in United Arab Emirates, have had temporarily suspended their operations, which have since resumed, but are subject to further delays and/or suspensions.

Continued hostilities in the Middle East involving the United Arab Emirates could negatively impact our operations. The closure of airports or airspace, a reduction in airline operations, or decreased travel to the region could result in reduced passenger traffic at the airports where we operate, which could in turn reduce demand for our services and materially decrease our revenues. In addition, further military activity, missile or drone attacks, or the threat of such attacks could disrupt airport operations, damage infrastructure, or result in additional security restrictions imposed by governmental authorities or airport operators.

Any escalation of the conflict or additional attacks affecting aviation infrastructure in the region could lead to prolonged airport disruptions, increased operating costs, reduced customer traffic, or temporary or permanent closures of our locations in the United Arab Emirates, which could materially and adversely affect our business, financial condition and results of operations.

These concessions involve risks that are different from the risks involved in operating a concession independently, and include the possibility that our local partners:

The continued listing standards of Nasdaq provide, among other things, that a company may be delisted if the bid price of its stock drops below $1.00 for a period of 30 consecutive business days or if stockholders’ equity is less than $2,500,000. As of the date of this Annual Report on Form 10-K, we are now in compliance with the Minimum Bid Price Rule (as defined herein). In the past, we have failed to meet the continued listing requirements of Nasdaq. For example, on December 1, 2025, we received a letter from the Listing Qualifications Department of the Nasdaq Stock Market indicating that, based upon the closing bid price of our common stock for the 30 consecutive business days between October 17, 2025, to November 28, 2025, we did not meet the minimum bid price of $1.00 per share required for continued listing on the Nasdaq pursuant to Nasdaq Rule 5550(a)(2) (the “Minimum Bid Price Rule”). The letter also indicated that we will be provided with a compliance period of 180 days (until June 1, 2026) (the “Compliance Period”), in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A). On March 11, 2026, we received a letter from the Listing Qualifications Department of Nasdaq stating that for the last 10 consecutive business days, from February 25, 2026, to March 10, 2026, the closing bid price of our common stock had been at or greater than $1.00 per share. Accordingly, we have regained compliance with the Minimum Bid Price Rule and per the Letter, the matter is now closed.

The securities purchase agreement, dated as of February 24, 2026, by and between us and the investor named therein (the “February 2026 Purchase Agreement”), pursuant to which we issued in a private placement (the “February 2026 Private Placement”) the shares of Series H Preferred Stock, and warrants to purchase shares of common stock (the “February 2026 Warrants”), contains customary representations, warranties and agreements by the Company, customary conditions to closing and indemnification obligations of the Company, including for liabilities under the Securities Act and other obligations of the parties and termination provisions, including reservation requirements. In addition, pursuant to the placement agency agreement with Dominari Securities LLC (the “Placement Agent”), dated February 24, 2026, we agreed not to offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of capital stock of the Company or any securities in a Variable Rate Transaction (as defined therein) for period of six (6) month after the Closing of the February 2026 Private Placement.

We may be unable to raise capital by offering shares of our common stock because we do not currently have enough authorized shares available for such a transaction.

Under our Amended and Restated Certificate of Incorporation, as amended (the “Charter”) we currently have only 1,896,776 authorized and unissued shares of common stock that would be available for offering in a capital-raising transaction. This number of shares would not be sufficient for raising a significant amount of capital by means of an offering of shares. In order to increase the number of authorized shares of common stock, our Charter would need to be amended, which may only be done by the vote of our stockholders. Calling a meeting of our stockholders involves a significant amount of time and expense and, in any event, should such a meeting be called for the purpose of increasing the number of authorized shares of common stock, there can be no assurance that our stockholders would vote in favor of such a proposal. The fact that we do not currently have enough authorized shares available for a capital-raising transaction may make us dependent on alternative means of raising capital in order to continue our operations, and there can be no assurance that such alternative means may be available to us on acceptable terms or at all.

May 2025 Warrant Amendment

On May 16, 2025, the Company entered into an omnibus amendment (the “Warrant Amendment”) with each of the holders of the Series A Warrants and Series B Warrants. The Warrant Amendment makes certain adjustments to the definition of a “Fundamental Transaction” in each of the Warrants, as described in the Warrant Amendment, including changing the scope of the definition applicable to tender or exchange offers that the Company makes, allows one or more Subject Entities (as defined in the Warrant Agreement) to make, or allows the Company to be subject to, to require such a tender or exchange offer to represent more than 50% of the outstanding voting power of the Company. Further, the Warrant Amendment modifies certain terms of the Warrants relating to the rights of the holders in the event of a Fundamental Transaction (as defined in each of the Series A Warrants and Series B Warrants, and as each amended by the Warrant Amendment) that is not within the Company’s control, including that upon a Fundamental Transaction not being approved by the Company’s Board of Directors, the holders of the Warrants shall only be entitled to receive from the Company or any successor entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value (as defined in each of the Series A Warrants and Series B Warrants and as each amended by the Warrant Amendment, as described below) of the unexercised portion of such Warrants, that is being offered and paid to the holders of the Company’s Common Stock. In addition, the Amendment revises the definition of Black Scholes Value related to the volatility input which is now an expected volatility equal to the 30 day volatility obtained from the “HVT” function on Bloomberg (determined utilizing a 365 day annualization factor) as of the trading day immediately following the earliest to occur of (1) the public disclosure of the applicable Fundamental Transaction and (2) the date of a holder’s request.

November 2025 Exchange Agreement

On November 3, 2025, the Company entered into a Securities Exchange and Amendment Agreement (the “Exchange Agreement”) with the January 2025 Investors, pursuant to which, the Company exchanged a portion of the Company’s outstanding shares of Series G Preferred Stock, including all accrued and unpaid dividends thereon equal to $1,800 in aggregate Stated Value, held by the January 2025 Investors, for senior secured convertible notes (collectively, the “Notes”) in the aggregate principal amount of $3,387 (collectively, the “Exchange”). The Notes were convertible into shares of the Company’s Common Stock in accordance with their terms and were secured by a first priority security interest in the assets of the Company and its subsidiaries. The Exchange closed on November 10, 2025 (the “Closing Date”).

In connection with the Exchange, the Company and the January 2025 Investors agreed to (A) amend certain terms of the Company’s Series G Preferred Stock as set forth in a Certificate of Amendment (the “Certificate of Amendment”) to the Certificate of Designations of the Series G Convertible Preferred Stock (the “Certificate of Designations”) as described below, and (B) amend and restate the January 2025 Investors’ (i) Series A warrants (the “Amended and Restated Series A Warrants”) and (ii) Series B Warrants (the “Amended and Restated Series B Warrants” and, collectively with the Amended and Restated Series A Warrants, the “Amended and Restated Warrants”) to (A) reduce the exercise price of the Warrants to $1.00, and (B) add certain anti-dilution provisions such that the exercise price of the Warrants will be subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable exercise price.

February 2026 Private Placement

On February 24, 2026, the Company entered into the February 2026 Purchase Agreement with the a certain accredited investor (the “February 2026 Purchaser”) for the issuance and sale in a private placement of an aggregate of (i) 31,333 shares of the Company’s newly-designated Series H Convertible Preferred Stock, par value of $0.01 per share and a stated value of $1,000 per share (the “Series H Preferred Stock”), initially convertible into up to 66,665,957 shares of common stock, at an initial conversion price of $0.47 per share, subject to adjustment for certain customary adjustments, and (ii) the warrants (the “February 2026 Warrants”) to purchase up to 66,665,957 shares of common stock, at an initial exercise price of $0.345 per share, subject to adjustment for certain customary adjustments, for aggregate gross proceeds of approximately $31,300. The February 2026 Warrants expire three years from the date of issuance. The February 2026 Private Placement closed on February 27, 2026.

In connection with the February 2026 Private Placement, pursuant to a placement agency agreement (the “Placement Agency Agreement”), dated as of February 24, 2026, by and between the Company and Dominari Securities LLC (the “Placement Agent”), the Company engaged the Placement Agent to act as an exclusive placement agent in connection with the February 2026 Private Placement and agreed to (i) pay to the Placement Agent (a) a cash fee equal to 8% of the gross proceeds of the February 2026 Private Placement and (b) reimbursements and payments of certain expenses, including non-accountable expense allowance equal to 1% of the gross proceeds raised in the February 2026 Private Placement and reasonable out-of-pocket expenses, not to exceed $250, and (ii) issue to the Placement Agent warrants (the “Placement Agent Warrants”) to purchase up to an aggregate number of shares of Common Stock equal to 8% of the aggregate number of shares of common stock underlying the securities issued in the February 2026 Private Placement, with terms identical to the February 2026 Warrants, except that the Placement Agent Warrants have a term of five (5) years from the date of issuance. The Placement Agency Agreement contains customary representations, warranties and agreements of the parties, and customary indemnification obligations of the Company.

In connection with the February 2026 Private Placement, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the February 2026 Purchaser and the Placement Agent, pursuant to which the Company has agreed to prepare and file a registration statement with the SEC registering the resale of the shares of common stock underlying the Series H Preferred Stock and shares of common stock underlying the February 2026 Warrants and the Placement Agent Warrants no later than the earlier of (a) 50 days after the later of (1) the closing date of the February 2026 Private Placement or (2) the Escrow Release Date (as defined in the Registration Rights Agreement) and (b) the second trading day following the date on which the Company files its Annual Report on Form 10-K for the year ended December 31, 2025 (the “Filing Deadline”), and to use best efforts to have the registration statement declared effective as promptly as practical thereafter, and in any event no later than 60 days following the Filing Deadline (or 90 days following the Filing Deadline in the event of a “full review” by the SEC).

The Company used the net proceeds from the February 2026 Private Placement, in part, to repurchase certain outstanding indebtedness, redeem previously issued preferred equity and warrants in the Repurchase (see below February 2026 Omnibus Agreement).

February 2026 Omnibus Agreement

On February 24, 2026, the Company entered into the Omnibus Agreement, by and between the Company and January 2025 Investors, pursuant to which, the Company agreed to (i) repurchase from the January 2025 Investors $5,673 of aggregate principal amount of the Notes, representing the entire outstanding principal amounts of the Notes and any accrued and unpaid interest thereon, (ii) redeem 196 shares of Series G Preferred Stock held by the January 2025 Investors, including $283 of accrued and unpaid dividends thereon, representing all outstanding shares of Series G Preferred Stock, and (iii) redeem all Amended and Restated Warrants held by the January 2025 Investors, representing all outstanding Series A Warrants and Series B Warrants, for an aggregate cash purchase price of $9,000 (collectively, the “Repurchase”). The Repurchase closed on March 2, 2026.

On March 4, 2026, the Company filed a Certificate of Elimination (the “Certificate of Elimination”) with respect to its Series G Preferred Stock, with the Delaware Secretary of State. The Certificate of Elimination (i) eliminates the previous designation of 4,000 shares of Series G Preferred Stock, none of which were outstanding at the time of filing, (ii) causes such shares of Series G Preferred Stock to resume the status of authorized but unissued shares of preferred stock of the Company and (iii) eliminates all reference to the Series G Preferred Stock from the Company’s Amended and Restated Certificate of Incorporation, as amended.

Preferred Stock

The terms of the Preferred Stock are set forth in the respective Certificate of Designations. The shares of Series H Preferred Stock are convertible into the Conversion Shares at the election of the holders of the Series H Preferred Stock (the “Holders”) at any time at an initial conversion price of $0.47 per share (the “Conversion Price”). The Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications, stock combinations and the like.

A Holder of the Series H Preferred Stock may not convert any portion of the Preferred Stock to the extent that the Holder, together with its affiliates, would beneficially own more than 4.99% of the Company’s outstanding shares of Common Stock immediately after conversion, except that upon at least 61 days’ prior notice from the Holder to the Company, the Holder may increase the beneficial ownership limitation to up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the conversion.

Pursuant to the Certificate of Designations, so long as any shares of the Series H Preferred Stock are outstanding, the Company may not, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, any securities of the Company without the prior express written consent of the Required Holders (as defined in the Certificate of Designations). In the event that dividends are consented to by the Required Holders, the Holders of the Series H Preferred Stock shall be entitled to receive dividends on shares of the Series H Preferred Stock equal (on an as-if-converted-to-Common-Stock basis) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends may be paid on shares of the Series H Preferred Stock.

Except as otherwise provided in the Certificate of Designations or as otherwise required by law, the Series H Preferred Stock will have no voting rights except as provided by law. However, as long as any shares of Preferred Stock are outstanding, the Company may not, without the affirmative vote at a meeting duly called for such purpose, or the written consent without a meeting, of the Required Holders, voting together as a single class, (a) amend or repeal any provision of, or add any provision to, its charter documents, including, without limitation, its Certificate of Incorporation or bylaws, the Certificate of Designation, or file any certificate of designations or articles of amendment of any series of shares of preferred stock, in each case, only if such action would adversely alter or change in any respect the preferences, rights, privileges or powers, or restrictions provided for the benefit, of the Series H Preferred Stock, regardless of whether any such action shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation or otherwise; (b) increase or decrease (other than by conversion) the authorized number of shares of the Preferred Stock; (c) create or authorize (by reclassification or otherwise) any new class or series of shares that has a preference over the Preferred Stock with respect to dividends or the distribution of assets on the liquidation, dissolution or winding up of the Company; (d) pay dividends or make any other distribution on any shares of any capital stock of the Company junior in rank to the Preferred Stock; or (e) whether or not prohibited by the terms of the Preferred Stock, circumvent a right of the Preferred Stock.

There is no established public trading market for the Preferred Stock and the Company does not intend to list the Series H Preferred Stock on any national securities exchange or nationally recognized trading system.

Warrants

The exercise price of the Warrants is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like. A holder of the Warrants may not exercise any portion of such holder’s Warrants to the extent that the holder, together with its affiliates, would beneficially own more than 4.99% of the Company’s outstanding shares of Common Stock immediately after exercise, except that upon at least 61 days’ prior notice from the holder to the Company, the holder may increase the beneficial ownership limitation to up to 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise.

There is no established public trading market for the Warrants and the Company does not intend to list the Warrants on any national securities exchange or nationally recognized trading system.

Pro Forma Financial Statements

The Private Placement and Repurchase (collectively, the “Restructuring”) represent a significant restructuring of the Company’s capital including a significant repayment of debt. The accompanying unaudited pro forma consolidated balance sheet as of December 31, 2025 is presented as if the Restructuring had occurred on December 31, 2025. The Restructuring is not expected to have an impact on the Company’s consolidated statements of operations and thus no pro forma consolidated statement of operations is presented.

These unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and do not include all of the information and note disclosures required by generally accepted accounting principles of the United States.

The unaudited pro forma condensed consolidated financial information is subject to the assumptions and adjustments described in the accompanying notes. These assumptions and adjustments are based on information presently available. Actual adjustments may differ materially from the information presented. The unaudited pro forma consolidated financial statements are based on the historical financial statements of the Company for each period presented and in the opinion of the Company’s management, all adjustments and disclosures necessary for a fair presentation of the pro forma data have been made. These unaudited pro forma consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the results of operations or financial condition that would have been achieved had events reflected been completed as of the dates indicated and may not be useful in predicting the impact of the reflected transactions on the future financial condition and results of operations of the Company due to a variety of factors.

The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable. The unaudited pro forma consolidated financial statements are for illustrative and informational purposes only and do not purport to represent what our financial position or results of operations would have been if the proposed transactions had actually occurred as of the dates indicated, nor does it project our financial position at any future date or our results of operations or cash flows for any future period.

The adjustments in the unaudited pro forma consolidated financial information have been identified and presented to provide relevant information necessary for an illustrative understanding of XWELL, Inc. upon consummation of the Restructuring. The unaudited pro forma transaction accounting adjustments presented in the accompanying notes represent management’s estimates based on information available as of the date of these unaudited pro forma consolidated financial statements and are subject to change as additional information becomes available and analyses are performed.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2025 (In thousands, except share and per share data)

See accompanying notes to the consolidated financial statements.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Nasdaq Minimum Bid Price Requirement

On December 1, 2025, we received a letter (the “Letter”) from the Listing Qualifications Department of the Nasdaq Stock Market indicating that, based upon the closing bid price of our common stock for the 30 consecutive business days between October 17, 2025, to November 28, 2025, we did not meet the minimum bid price of $1.00 per share required for continued listing on the Nasdaq pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Rule”). The letter also indicated that we will be provided with a compliance period of 180 days (until June 1, 2026) (the “Compliance Period”), in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A). On March 11, 2026, we received a letter from the Listing Qualifications Department of Nasdaq stating that for the last 10 consecutive business days, from February 25, 2026, to March 10, 2026, the closing bid price of our common stock had been at or greater than $1.00 per share. Accordingly, we have regained compliance with the Minimum Bid Price Rule and per the Letter, the matter is now closed.

No impairment for goodwill was recognized as of December 31, 2024.

The increase in foreign exchange loss of $395 was primarily due to the fluctuation of the foreign exchange rate in Turkey, creating a remeasurement loss on our lease liability. The decrease in other non-operating expense of $44, net was primarily driven by a decrease in finance expenses related to bank fees and charges.

Change in fair value of warrants and derivatives

The change in fair value of derivatives and warrant liabilities during the year ended December 31, 2025 primarily reflects changes in the Company’s stock price and the impact of amendments to certain outstanding warrant agreements entered into in November 2025 in connection with the Securities Exchange and Amendment Agreement with holders of the Company’s Series G Convertible Preferred Stock. As part of this transaction, certain warrants were amended and restated and a portion of the outstanding Series G Convertible Preferred Stock was exchanged for senior secured convertible notes. These modifications affected the valuation assumptions used in measuring the related derivative and warrant liabilities at fair value. The loss on issuance is due to the initial fair value of the Series G Preferred Stock exceeding the fair value of the proceeds received.

Interest income, net

The increase of $281 was primarily driven by the recognition of $473 in interest income associated with the employee retention credit, partially offset by lower interest earned on cash balances during the period.

As of December 31, 2025, the Company had cash and cash equivalents of approximately $2,617, marketable securities of $7, total current assets of $5,910, total current liabilities of $12,892, and long term operating lease liabilities of $7,035. The Company’s working capital was in a deficit position at December 31, 2025, compared with a working capital surplus of $6,113 at December 31, 2024. These conditions, together with historical operating losses and negative cash flows from operations, previously raised substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of these financial statements.

On February 24, 2026, the Company announced it had entered into a securities purchase agreement for a private placement of Series H Convertible Preferred Stock and accompanying warrants, which is expected to result in gross proceeds of approximately $31,300 before fees and expenses. The private placement was priced at-the-market under Nasdaq rules and closed on February 26, 2026. As described in the announcement, the Company intends to use a portion of the proceeds to repurchase certain outstanding notes, redeem the Company’s Series G Preferred Stock and certain warrants, with the remainder used for general corporate purposes and working capital needs.

Management evaluated the impact of this financing, together with the Company’s current operating plan, on the Company’s liquidity and capital resources for the twelve months following the issuance of these financial statements. The expected net proceeds from the Series H transaction are anticipated to eliminate the Company’s working capital deficit and provide sufficient liquidity to fund operations for at least the next twelve months. On this basis, management has concluded that the conditions that previously raised substantial doubt about the Company’s ability to continue as a going concern have been alleviated as of the date these financial statements are issued.

The consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments that might result if the Company were unable to continue as a going concern.

Risks Relating to the Sale Proposal

You should carefully consider the risk factors related to our business described under the heading “Risks Relating to the Sale Proposal” beginning on page 32 of our preliminary proxy statement on PREM 14A, filed with the SEC on July 27, 2026, which such section and risk factors incorporated herein by reference.

Risk Factors Relating to Our Business Following the Sale

You should carefully consider the risk factors related to our business described under the heading “Risks Relating to the Our Business Following the Sale” beginning on page 35 of our preliminary proxy statement on PREM 14A, filed with the SEC on July 27, 2026, which such section and risk factors incorporated herein by reference.

Naples Wax Center's strategy is focused on driving customer acquisition and retention, expanding retail product sales, and enhancing operational efficiency across its existing locations. The Company continues to evaluate opportunities to strengthen the Naples Wax Center brand and expand its wellness offerings where appropriate.

July 2026 Securities Purchase Agreement

On July 6, 2026, the Company entered into a Securities Purchase Agreement by and among the Company, XpresSpa, XpresTest (together with XpresSpa, the “Target Companies”), and Express Wellness Group, LLC, a Delaware limited liability company (the “Buyer”) to sell its ownership interests in the Target Companies, which together comprise substantially all of the Company's airport-based operations, for aggregate cash consideration of approximately $13.0 million (the “Purchase Price”), subject to customary working capital and other purchase price adjustments(the “Sale”). At the closing of the Sale, a portion of the Purchase Price, equal to $2,650,000 in the aggregate, will be deposited into escrow accounts to secure certain of the Company’s post-closing obligations with respect to any purchase price adjustments or indemnities.

The consummation of the Sale requires the affirmative vote of holders of a majority of the outstanding shares of the Company’s common stock (the “Stockholder Approval”). The Company is required to file a preliminary proxy statement (the “Proxy Statement”) with the SEC within 20 days following the date of the Purchase Agreement.

Each of the Company and the Buyer may, under certain circumstances, be required to pay a termination fee equal to the greater of (A) $1,300,000 and (B) $650,000 plus documented out-of-pocket expenses (capped at $2,000,000 for expenses).

The proposed transaction represents a significant strategic shift for the Company and is intended to streamline operations and increase the Company's focus on its non-airport wellness businesses. Following the completion of the transaction, the Company expects its operations to be primarily comprised of its non-airport wellness activities, including Naples Wax Center. The transaction remains subject to customary closing conditions and approvals and is expected to close during the fourth quarter of 2026.

Resignation and Appointment of Director

On August 3, 2026, Ezra T. Ernst, the President, Chief Executive Officer and director of the Company, notified the Company of his resignation as a director of the Company’s Board of Directors (the “Board”) and all committees of the Board, effective as of the same date. Mr. Ernst’s resignation from the Board was not in connection with any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Mr. Ernst will continue to serve as President and Chief Executive Officer of the Company.

On August 3, 2026, the Board appointed Gerard Reid as a director of the Board, effective as of the same date, to fill the vacancy resulting from Mr. Ernst’s resignation.

The net change in General and administrative expense for the period was an overall increase of $370 driven primarily by an increase in legal expenses related to the July 2026 Purchase Agreement for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

The change in other non-operating expense, net for the period was immaterial.

Following the repurchase of the Series G Preferred Stock during the first quarter of 2026, these liabilities were extinguished and no subsequent fair value adjustments were recognized during the three months ended June 30, 2026.

Six months ended June 30, 2026, compared to the six months ended June 30, 2025

The decrease in revenue of $928 or 6%, for the six months ended June 30, 2026, was primarily driven by the absence of revenues from the HyperPointe operations, which ceased operations as of December 31, 2025 and a slight decrease in Naples Wax revenue over the same period.

The decrease in cost of sales of $3,136 or 27%, for the six months ended June 30, 2026, was primarily driven by the lower labor cost directly associated with the HyperPointe operations, which ceased operations as of December 31, 2025. Salaries also decreased across the remaining operations and a decrease in occupancy cost which is consistent with the decrease in revenues for the six months ended June 30, 2026.

The decrease in depreciation and amortization of approximately $18 or 5% for the six months ended June 30, 2026, was not individually significant and was primarily attributable to normal changes in the Company’s depreciable asset base compared to the six months ended June 30, 2025.

General and administrative expenses

The increase of approximately $3,655 for the six months ended June 30, 2026, was primarily attributable to increased legal cost related to the July 2026 Securities Purchase Agreement, increased franchise taxes, and increased public company administrative costs when compared to the six months ended June 30, 2025.

Other non-operating expenses

The increase in foreign exchange of $1,177 was primarily due to the fluctuation of the foreign exchange rate in Turkey, creating a remeasurement loss on our lease liability. The increase in other non-operating expense of $12, net was primarily driven by a decrease in finance expenses related to bank fees and charges.

The following is a summary of the transactions included in other non-operating expense, net for the six months ended June 30, 2026 and 2025:

The change in other non-operating expense, net for the period was immaterial.

Change in fair value of warrants and derivatives

The derivative liability and warrant liability were associated with the Company's Series G Preferred Stock. During the first quarter of 2026, the Company repurchased the outstanding Series G Preferred Stock and extinguished the related derivative and warrant liabilities. As a result, no gain or loss related to the remeasurement of Series G derivative or warrant liabilities was recognized during the six months ended June 30, 2026. The loss on issuance of Series G Preferred Stock of $3.4 million recognized during the six months ended June 30, 2025 related to the January 2025 Securities Purchase Agreement and there was no comparable transaction during the six months ended June 30, 2026.

The decrease of $236 for the six months ended June 30, 2026 was primarily driven by a reduction in interest income and the recognition of interest expense in the current period.

Off-balance sheet arrangements

We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any activities that expose us to any liability that is not reflected in our condensed consolidated financial statements.